1. Technical Field
The present disclosure is directed to a system and method for identifying and upgrading or otherwise improving the performance of selected transmission grid elements and/or operation of a transmission grid and, more particularly, to a system and method for identifying transmission grid constraint(s) with physical and/or economic characteristics that satisfy predetermined criteria and implementing step(s) to alleviate such constraint(s) on terms and conditions that shift restrictive, major capital requirements, construction and development risk away from grid owners/operators.
2. Background Art
The United States electrical system has historically been run by integrated, regulated utilities. These utilities were charged with building and operating all three of the major components of the US electrical system:                Generation—Building and operating power plants (mostly coal, natural gas, oil, nuclear and hydro);        Transmission—Building and operating the high voltage long distance wires, transformers, substations and other components that transport and support the electricity from its point of generation to its point of distribution; and        Distribution—Building and operating the substations, systems and low voltage lines that distribute the electricity within a specific area (such as an industrial park or residential neighborhood).        
The physical infrastructure of the North American transmission system is limited in all geographic regions. Over the last 10 to 20 years, the system evolved to meet the service territory needs of electric utilities, but not to accommodate large scale wholesale power trading or generation outside of an integrated utility's own local region. Transmission between service territories has generally been built to accommodate shares of generating plants in one area owned by utilities elsewhere and to provide modest levels of generation reserve sharing between utilities and regions. Today, the transmission system can be characterized as a set of networks covering the service territories of the dominant utilities, separated by relatively weak and often stressed regional system interconnections. An exception to the foregoing description is in the West, where the Pacific AC and DC inter-ties were built to export the massive amounts of non-firm hydro-energy available in most years in the Pacific Northwest to California and to enable seasonal diversity exchanges between north and south.
In the United States, the Federal Energy Regulatory Commission (FERC) and the various state Public Service Commissions regulate the utility companies. These governing bodies approve all of the utilities' new construction and upgrades, and dictate the amount that the utilities charge (tariffs) based upon the value of their assets. This arrangement guarantees each utility a constant rate of return on its investments and, up until deregulation, all utilities were guaranteed monopolies in their respective territories.
In 1996, FERC issued Order 888 and Order 889, which deregulated the U.S. electrical markets in hopes of eliminating the utility monopolies by opening the door for innovative approaches to minimize costs of electricity to consumers. One significant result of deregulation was the appearance of merchant generators, or independent power producers, who compete against the existing generating assets of the integrated utilities. This burst of growth in merchant energy producers, along with the growth in electrical energy trading, captured a significant portion of the cash flow of the industry available to invest. However, the FERC orders gave limited direction as to how to provide the required amount of investment in the electrical transmission grid, which was needed to complete FERC's vision of lower electrical cost to all consumers in the United States.
Today, the largest problem facing the merchant power market is the lack of available electrical transmission capacity. The transmission system was built to serve the various electrical loads with the driving factor for determining improvements being reliability as opposed to economic benefit. Without market factors driving improvements in electrical transmission, the US electrical system has suffered from decades of severe under investment while demand has continued to grow.
As evidenced by the blackout that covered much of the Northeastern United States in August, 2003, the transmission grid in the United States is in need of a long overdue upgrade. Although the industry has known this for years, the blackout gave the need to remedy the situation a much higher sense of urgency. One of the major reasons that the grid has not kept up with the growth in the economy of the United States is that there are few economic drivers to motivate owners to perform such upgrades.
The deregulation of the energy markets in the early 1990s caused a sea of change in the way energy is produced, transported and sold in the US. The financial rewards were perceived to be in generating and trading the energy in newly developed competitive markets. FERC has seldom granted a return on equity (ROE) for transmission investment greater than ten percent (10%), except to add some minor incentives, e.g., for transmission owners who join regional transmission organizations or divest transmission assets from vertically integrated monopoly functions. The transportation of power has been left up to the “old” system of vertical utilities, which were now operating in a new paradigm. Over 125,000 MW of new generation capacity has been added to the grid since 1996 by independent power producers who, by the requirements imposed by the Energy Policy Act of 1992, financed all of the enhancements to the transmission system that were necessary not only to interconnect to the grid, but to be integrated in the bulk power system.
At the core of the paradox that has come to exist in the regulatory environment, FERC (which has jurisdiction over the interstate sales of power) is powerless to order the construction of interstate transmission capacity. With the financial constraints associated with current energy system participants, funding has become more expensive, returns more elusive, and maintenance and improvement of the grid has fallen on the back burner. The result is that the movement (or “wheeling”) of electricity around the country is done on an inefficient and non-economic basis. In addition, problems are not being solved because the owners of the transmission systems operate under regulations that do not encourage spending money to upgrade the transmission system outside of maintaining perceived reliability needs (which, most often, are not developed to provide economic benefit to the end user).
Thus, a need exists for a system and/or method that addresses the substantial needs of the transmission grid. In addition, a need exists for capital funding mechanisms that will facilitate transmission grid needs to be addressed in a timely and effective manner. These and other needs are satisfied by the system(s) and method(s) disclosed herein.